Currys has been told to ditch its “price lock” commitment and make goods more expensive by a veteran hedge fund manager amid the cost of living crisis.
Crispin Odey, who holds a substantial stake in the firm, said “freezers and washing machines are going to have to be more expensive as they are currently being kept artificially low by two of the predominant market players — Currys and AO World,” according to the Telegraph.
But Currys has promised to increase the number of its products undertaking a price freeze, in a bid to keep “amazing technology within the reach of everyone”.
Alex Baldock, chief executive of the electronic goods retailer, also said the company’s grip on costs and its strong relationships with its suppliers will allow it to manage inflationary headwinds.
Meanwhile, online specialist and Currys’ biggest competitor AO World took the stock market by storm in the years after it floated in 2017, but has since seen its shares fall by around 80 per cent over the past 12 months on the back of warranty cancellations putting pressure on profits.
The company was forced to raise £40m from investors last month while one of the credit insurers serving some of its suppliers “rebased” its cover to reflect post-Covid-19 sales levels.
Odey added: “The price war between Currys and AO World is not benefiting either company. With profit margins at just 20 per cent, neither is going to make any money – which is not good news for shareholders.”
“Given their market dominance, increasing prices is not going to reduce demand,” he continued.
“If AO World does not follow, so be it. But the company has recently been forced to prop up its finances by asking shareholders for money – so it is patently not a sustainable model for AO either.”